The Decline of Men in the Workforce - Opinion: Free Expression - WSJ Podcasts

2022-09-03 01:19:55 By : Ms. Kat Ding

On this episode of Free Expression, Wall Street Journal Editor at Large Gerry Baker speaks with economist Nicholas Eberstadt about why men are leaving the workforce in greater numbers, what these men are doing with their time while not employed, and if the policies and economics of Covid-19 have forever changed the culture of the office.  

This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.

Speaker 1: From the opinion pages of The Wall Street Journal, this is Free Expression with Gerry Baker.

Gerry Baker: Hello, and welcome to free expression with me, Gerry Baker from The Wall Street Journal editorial page. Thanks very much for joining us. If you don't already, please be sure to subscribe at Apple Podcasts, Spotify and elsewhere, and do kindly leave us a nice review. This week on the podcast, we're going to examine what exactly is happening to the US labor force. Despite proliferating signs of weakness in the US economy, jobs growth since the pandemic has been relatively strong with overall employment recently returning to its pre-COVID high. But at the same time, millions of Americans have left the workforce and job vacancies remain near all time highs with employers reporting labor shortages across the economy. Nicholas Eberstadt, an economist at the American Enterprise Institute has documented the changing nature of US employment over the years. In his 2016 book, Men Without Work, he chronicled one especially alarming trend. The sharp decline in the number of men with jobs. Millions of working age men have been retreating from the labor force for years, and that trend has accelerated since the pandemic. In a new addition of the book to be published in September, he examines how the male exodus from work has now intensified and how it's spreading in fact to other demographics. And he explains why this shift represents such a major challenge for the US economy and for the country's future. Dr. Eberstadt is the Henry Wendt Chair in political economy at AEI, and he joins me now. Nick, thank you very much indeed for being here.

Nicholas Eberstadt: Hey, thanks for inviting me.

Gerry Baker: So Nick, let's start with this phenomenon that you've been tracking for a long time, which has large implications for the US economy, which is the decline of men, of working age men in the labor force. And if you would, just lay out some of the basic data, put it into historical context and explain what's been going on.

Nicholas Eberstadt: Sure. What economists call prime working age men. It's pretty self-explanatory, guys 25 to 54 are still the backbone of the economy and they have a tiny non-economic role in life also in raising families, raising children. Up until the 1960s, work rates for prime age men in America were consistent and very high. And then starting in the mid 60s, something changed. And since about 1965, we have seen a relentless and almost (inaudible), consistent retreat from the workforce for those men. Today, the work rate for prime age men is lower than it was in early 1940, which is the only really good measurement we have for The Great Depression, comes from the census of that year. At that time, the unemployment level for America was almost 15%, but work rates today are lower than they were for American men that age back in 1940. So we've got kind of a Great Depression scale work problem for men on our hands in the US right now.

Gerry Baker: As you point out in the book, this is not in large part, what we could call involuntary unemployment. A lot of this is voluntary removal from the workforce. I mean, should be careful about our terms, because I know we're going to talk to you about what exactly is driving it. But again, it's important to remember this is not captured in the unemployment figures. This is captured in the broader data that we have about the labor force. So millions of men who would, if we'd had sort of employment participation at the rates that we'd had in the 1960s, what's happened to them? Where have they gone? I mean, is it ... Some of them, presumably longer education, some of it is to do with disability. Give us the factors that have contributed to this remarkable decline.

Nicholas Eberstadt: No, you put your finger on it. The difference between the Depression era and now is that if you didn't have a job back in 1940, it was because you were looking for one and you couldn't find it. If you are a guy who doesn't have work today, the odds are it's because you've dropped out of the workforce all together. You're neither working nor looking for work. For every prime age guy who's unemployed, there are over four who are neither working nor looking for work. We have this unworking army of over 7 million prime age men in the United States today.

Gerry Baker: Prime age is 25 to 54.

Nicholas Eberstadt: Yes, 25 to 54. And it's kind of the key working group in the labor force. And we can parse that out a little bit. So about a 10th maybe, a little bit more than a 10th of this, not in labor force group, some of my (inaudible) nerds call them NILFs, about a 10th of them are full-time students who are getting ready to go back into the labor force to get better jobs with better skills. But almost nine tenths of that group are what I believe on the other side of the ocean, you used to call them NEET, Neither Employed nor in Education or Training. It's a group that has basically dropped out from the labor economy. And how these men subsist and what they do with their time, I think are pretty important questions for humanitarian reasons, but also for public policy. According to their self reported data, according to Time Use Surveys that the government submits to people who have all different walks of life for The Bureau of Labor statistics, these labor force dropouts basically don't do civil society. They don't do worship. They don't do charity. They don't do volunteering work. Although they've got, you'd think almost nothing but time on their hands, they don't do much help around the house with other people or housework. They don't get out of the house that much, they say. What they say they do is to watch screens. Now surveys don't tell us what screens they're watching or what's on them exactly. But they report clocking in about 2,000 hours a year in front of screens as if this were their full-time job. And other information says about half of these guys report using some sort of pain medication every day. So it's not just playing Call of Duty. It's playing Call of Duty stoned. And needless to say, this is not exactly the way to bulk up for skills that are going to get you back into the workforce. It's unfortunately much more likely to be a entry pathway to the now all too familiar depths of despair that we are coping with in the United States.

Gerry Baker: Do we know how many of these men are receiving significant amounts of subsistence support from Medicaid, welfare benefits, disability benefits? Do we have a sense of essentially how they're sustaining themselves financially?

Nicholas Eberstadt: It's a terribly important question and our statistics are pretty miserable about this because they're based upon surveys where people typically under report, just the same way that in surveys, people under report their dividends or capital gains benefits. And because our government programs don't talk to each other, we have this archipelago of disability programs in the United States, some run by the Social Security Administration, others by the Veterans Administration, others by various states around the country, and then there's workman's competition. None of them talk to each other. So we don't have a single office which tells us the collectivity of how many of these unworking men are receiving, for example, disability benefits. One attempt that I did in that book, you mentioned, in Men Without Work to kind of parse this through, suggested that more than half of the unworking men are receiving at least one disability benefit. And about two thirds of them live in a household that's receiving at least one disability benefit. Disability benefits of course, were originally intended to protect the vulnerable who couldn't work. Increasingly we're seeing the program morph into a sort of very low level, somewhat (inaudible) income support program as an alternative to work.

Gerry Baker: To what extent is there taking a very, very long term view, and I do want to come up to more recent trends in a little while, but taking the long term view here, obviously sort of the inverse of declining male participation as increasing female participation, especially over the very long term. We talked about the 1930s. Back then very female participation in the labor force was very, very low grew gradually, but even by the 1960s, it wasn't that much. Obviously in the last 50, 60 years with many more women going into higher education. In fact, the numbers of women graduates is now far higher than male graduates. To what extent is this simply a reflection of that phenomenon of a shift in the sex distribution of the workforce, where just almost as many women are working as men and therefore this is part of the sort of social changes that we've seen in the last 50, 60 years or so?

Nicholas Eberstadt: It's funny, it's not as big an effect as one might think. I mean, of course, as you were indicating, women have always worked. It's just really in the United States since the end of the Second World War that they get paid for it. And we've had this huge influx into the paid economy, but from the 40s until about the year 2000, when women's work rates in America were really rising, the national overall work rate was also rising. Now, if women were just completely displacing men, it would've been flat. But so to a significant degree during that long period, female employment was supplementing male employment. Since the year 2000, we've seen a drop in both male and female work rates. So if women are stealing jobs from men, they're not doing a very good job of it. Both trends are going in the wrong direction.

Gerry Baker: I mean, again, there are those who argue that sort of the jobs of the new economy, it's a very old phrase, actually giving away my age by even using it. But the sort of the jobs that the modern economy, the contemporary economy tends to be creating. Again, the structure of the economy has changed dramatically. We've gone from heavy role for manufacturing employment, 50 to 100 years ago to jobs now, which are much more service oriented, much more ... There's obviously much more technology, but there's also healthcare, law, education. These are jobs that have been the ones that have been proliferating most. And again, and this may be an old fashioned male talking, but those do tend to be jobs that women tend to dominate. I mean, is the changing structure of demand for labor, part of what's explaining this?

Nicholas Eberstadt: It's partly, there's definitely some of that Gerry, and you can see that all across the world. I mean, there has been a decline in labor force participation for prime age guys, all across the OECD. The question is why has the plunge been so much worse, so much steeper and farther in the United States than in, let's say a country like France or Australia? Very different places, both of which have also seen their manufacturing sectors shrivel to about the same level or size in the economy that US manufacturing sector has shrunk. So the trends are everywhere, but we seem to be more severely affected by it.

Gerry Baker: You've written a lot in your book about incarceration and the role that incarceration may possibly play in this. And not just obviously the currently incarcerated population, which I think in the US is a little over 2 million. But also those people who have been incarcerated and the extent to which maybe they are excluded from the workforce in some way. Does that play a role?

Nicholas Eberstadt: I think it plays a huge role. It's also a terrible blind spot in America's demographic and social statistical infrastructure. We don't collect information on this. We collect a little bit of information about who gets arrested, who goes to prison. We don't have any government numbers on how many ex-cons there are in America. And at this point in time, that means that we are ignoring about 25 million adults and their circumstances. We've had this absolute explosion of sentencing with the crime wave that began in the 60s and with the punishment wave that followed it. And nowadays there are probably 10 ex-cons in society for every 1 person behind bars. Maybe one in seven adult men has a felony in his background, but we don't collect any information about their employment patterns. Little bits that we have suggest that they look pretty grim. And obviously we can't have any sort of evidence based policies about how to try to rehabilitate or reintegrate ex-cons if we don't have the evidence.

Gerry Baker: I realize that you're an economist and not a sociologist, but I wonder to what extent this problem that you've written so extensively about is not part of, or maybe contributing to a broader phenomenon of what various people have talked about as the alienation of men, particularly younger men from society. When we started talking, you talked about what these men are doing, and they're sitting at home, looking at screens, sometimes high on opioids or (inaudible), whatever else. And we have this phenomenon. I realize I'm very conscious as I say this, that you and I are a couple of middle-aged men, maybe bemoaning the plight of men in society when there may be many other more pressing concerns. But as you look at the implications of this and what you described, it's a fairly kind of scary scenario of these possibly disaffected, possibly dysfunctional males. Is this a broader societal problem you think? And what are the implications of it?

Nicholas Eberstadt: Gerry, I think it's a lot more than you and I talking about grandpa's war stories. It's absolutely central to where the United States is heading in the future. And people who are trained in modern economics, I think have a very narrow and dare I say, impoverished view of the poverty problem. They're trained to look at poverty as a shortfall of income. Whereas I think a more human view would understand the distinction between material poverty and misery. I mean, this was a distinction which was not lost upon ordinary people in the Victorian era, in the UK or in the United States, in the Gilded era, back in the 19th century. And we've had this conjoined explosion of prosperity and soaring of misery in the American public. And an awful lot of the misery, the depths of despair, the broken families, the increase in dependence isn't really tracked in any sort of comprehensive way by our national authorities. Part of it may be poor training of economists, but part of it is that we've allowed these problems to fester in plain sight.

Gerry Baker: We're going to take a short break here, but when we come back, we'll have more with economists, Nick Eberstadt on what a future of men without work looks like. Stay with us. Welcome back. We're talking with economist, Nick Eberstadt about the future of work in America. Let's talk about the wider pathologies of the US economy. One of the things you, and you just mentioned it here, and you talk about in the new edition of your book, the paradox, if you like of extraordinary growth in Americans' wealth over the last 20 years, since 2000, kind of thanks both the house price increases, but financial asset price increases, which we've seen grow an extraordinary rate. Now there's some question marks about the distribution of that. And obviously we've become much more unequal, but it has been an extraordinary explosion of wealth. At the same time as you well point out, because economic growth has been relative to the previous 50 years, the second half of the 20th century has been extremely weak. And consequently income and things like what we've been talking about here, employment with particular manifestations of it with male employment and wages have also been weak. What's going on there do you think? I mean, what explains this extraordinary divergence between an increasingly wealthy, affluent economy, at least measured by wealth, but this marked slowdown in the data that basically drive most people's lifetime prosperity, such as employment and wages?

Nicholas Eberstadt: Yeah, it's a huge question. I mean, that's kind of the defining paradox of our current time, isn't it? We've got this explosion of wealth, an average of over a million and a half dollars of private wealth per notional household of four in the United States today. As you mentioned, it's not at all evenly generated or distributed. While the economy has been much slower than it was in the earlier post-war era, and work rates are down very substantially, more than population aging would suggest, we have maybe 10 million fewer paid jobs today than we would've had at year 2000 rates. And you can kind of see what the difference is in our society there. By the way more wealth for the wealth folders and less work for the workers is usually a pretty classic way to kind of set the stage for a big populous reaction and look what we have on our hands. The slowdown in the economy has been looked at by an awful lot of people. Some of them have theories about lessening demand, sort of maybe a Neo-Keynesian view, the sort of secular stagnation that is associated with the arguments of say Larry Summers. Since I do demographics, I tend to look at the supply side. And if we look at the supply side, it looks to me like we've got a human resource problem in the United States. We've had, as you know, a stagnating or even declining life expectancy in the United States for much of the 21st century. Unremarked upon is the extreme, and to me worrisome, slowdown in educational attainment improvement in the United States. And of course we've got problems with our business climate. You put all of those things together and it doesn't seem to me shocking that our economic growth will be slowing. You add to that the pathological declines in employment for certain segments of the United States population, and you've got a pretty good recipe for slow growth as far as the eye can see. If we stay on the path that we've been on since the year 2000, we're on a track that implies a doubling of per capita income every 70 years. I don't like a path that looks like that.

Gerry Baker: Again by historic standards, there are those who argue, of course, that actually to some extent, looking back at the last 20 years and comparing it with the sort of previous, certainly the previous 50 years is unhelpful because it may well turn out to be that particularly the period after the Second World War. That period from say 1950s to the late 1960s, 1970 was a period of historically unusual, very rapid productivity growth, which led to very rapid growth and increases in the labor force, the sort that we've just talked about with women coming into the labor force. And that combination of demographic and productivity changes produced kind of unusual explosion of prosperity, which we can't recapture. I mean, do you think there's something to that?

Nicholas Eberstadt: I think that's an argument to keep in mind and there may be something to it, but maybe less to it than many believe. Because in principle, there's no reason that health can't continue to improve, that education and skills can't continue to improve, that we can't have an innovative business system producing new productive knowledge, applying new productive knowledge, live longer, work longer. All of those things look to me like a formula for continuing productivity and wealth increases in a aging and maybe even someday a shrinking society.

Gerry Baker: Let's talk about where we are now. By now, I really mean the sort of post pandemic economy. And we do seem to be in a very strange place as I said at the beginning. On the one hand, we have this phenomenon of GDP, output seems to be declining or at least in the first half of the year, we've had this very strong employment growth. And then you have this particularly strange phenomenon by sort of conventional economic standards. Unemployment has declined. Now I know by its broadest measure, it hasn't gone back to where it was, but it has declined quite substantially in the last year or so since the pandemic. But there is this enormous demand for labor, which is not being matched at all. And we are seeing, you have a very nice phrase for this in your book. Your original book is called Men Without Work. And now we seem to be in this position of work without men, this huge gap, this huge labor shortage. What's your sense of what's going on? Is this because the trends that you've talked about, particularly men leaving the workforce have been accelerated by the pandemic, or is it wider than that? Are we seeing other trends that maybe there's been a wider breakdown in the kind of relationship between labor demand and supply?

Nicholas Eberstadt: As you say, we've got this situation now where we've had 11 million, roughly speaking, 11 million unfilled jobs since last Labor Day, since last September, 2021. And employers are screaming for workers, they're begging for workers, and there are millions, and millions, and millions of men and women who are sitting on the sidelines, not coming back into the economy at a time when workers have more bargaining power than in living memory, in this Great Resignation that people call it. So this is not entirely explained by economic analysis. As you mentioned earlier, sociology or social pathology, new attitudes towards work may have something to do with it, but you have to look at the interventions, the economic interventions during the COVID emergency to understand the full dimensions of the retreat from labor. COVID was a great historical calamity, but the effects on the labor force are not only due to the virus itself. They're due to the government interventions to cope with the pandemic. We avoided having a second Great Depression, and that was a great policy success. But when you have immense policy interventions, you also have immense unintended consequences. The unintended consequence of the Fed and fiscal, congressional, executive interventions in the economy were to disincentivize work in a way unlike anything we'd ever seen before. Just to give you an example. Thanks to the stimulus of 2020 and 2021, Americans had more money in their pockets than they'd ever have before, in history. During this emergency, Americans had more money in their pockets. The US savings rate more than doubled. Thanks to government borrowing and government transfers, Americans put aside a windfall of over $2.5 trillion dollars in 2020 and 2021. This, what would you call it? COVID policy lottery winning thing explains part of what's going on now. Because a large number of people have retreated from the labor force and have not yet come back. The face of the unworking problem, the labor force gap that we have now, we've got three, three and a half million, fewer people in the labor force today than we would've had at pre-pandemic participation rates. It's not just the prime age men. The new face of worklessness in America is our 55 plus population. Over half of the missing workers in this gap in the US today are 55 or older. And until the pandemic, the 55 plus group was really kind of the one ray of sunshine that we had in the US employment Tableau. It was the only group that had significant steady increases in work rates from the late 20th century to 2019. But their rates have been floundering since the pandemic and bizarrely they're lower now than they were in the summer before the vaccines were rolled out. I think that a premature retirement, unsustainable retirement perhaps, funded by some of the COVID policy lottery winnings helps to explain much of what's going on there.

Gerry Baker: Do you think the pandemic has resulted in a ... It's also impossibly early for us to answer this with confidence, but has it resulted in structural changes to employment? Are these changes that we're seeing ... Put it the other way around. Is the last two years simply a disruption to the economy, and we're going to go back to previous trends? Or do you think the kind of trends that you've been talking about, declining male workers, as you said in your last answer, declining work among men and women over 55, is that just a phenomenon of when as you say, huge amounts of government support, large governments (inaudible), huge increases in savings rates because people couldn't spend any money gave people a huge financial push in big increases in house prices. People in their late 50s, 60s, maybe thinking, you know what? I don't really need to work. I'm actually quite comfortably off. I've got all this income, maybe one member of the household is working anyway. But now that those trends are being reversed, do you expect to perhaps see a return to where we were before the pandemic? Or do you think this is just embedding those changes that you've talked about being in place for a long time?

Nicholas Eberstadt: Well, of course we'll only know with the fullness of time, but we've had a shock. And now we're wondering how much of that turns into a permanent shift in attitudes and behavior. I'd assume that people are going to have spent down their COVID policy winnings within another year, maybe another year and a half, at which point we ought to have a much better idea of how much the new normal includes less work for people over 55, less work for women of prime working ages, and a continuation of course, of the trend of less work for prime age men. We get a little bit of a hint at some of this from those Time Use Surveys I mentioned earlier in our conversation. The Time Use Surveys for guys of between 55 and 64 have a lot of the men without work disease patina to them. Guys who are not in the labor force spend a huge amount of time in front of screens, if they're between 55 and 64, that's not the way to get back into the game of working life. And we're starting to see some of that also among prime age women who don't have kids at home and are not in the labor force. I wouldn't want to make a prediction on that, but I think those are warning lights we ought to be paying attention to.

Gerry Baker: Finally, Nick, as you consider all of this, these long term trends, the extent to which they've been accelerated by the pandemic. As you look ahead, it's a pretty unsettling picture you paint as we look ahead for the US economy, an economy, again, with this large army of unworking men, other demographic groups, perhaps also out of the workforce. Let me put it in a more positive way. What can we do to maybe either to adapt to this picture or to change this picture? What are the policy implications of this?

Nicholas Eberstadt: I guess I'd rather change the picture than get used to a grim new normal, where we double our incomes every 70 years. Part of it, I think is understanding that employment is more than just an economic phenomenon. Work is a service. Work is a service to others that helps complete you. It is something that connects you with your community. Work has all sorts of positive spillovers, indirect effects for families, for communities. I think for society at a time when our social capital and trust and institutions is at near all time lows, being more involved in working world, I think has intangible benefits that win on their own merits. So I don't know that this is a problem that government can solve. This is probably something that we want our little platoons to work on a little more.

Gerry Baker: Nicholas Eberstadt of the American Enterprise Institute and author of a new edition of your book, Men Without Work. It's a post pandemic edition, which tracks the disturbing demographic trends that we've been talking about in this. Nicholas Eberstadt, thanks very much indeed for joining us.

Nicholas Eberstadt: Thanks so much.

Gerry Baker: Well, that's it for this week's episode of Free Expression with me, Gerry Baker from The Wall Street Journal opinion pages. Thanks very much for listening. Please join us again next week for another exploration of the issues that are shaping our world. Thank you and goodbye.

Gerry Baker is Editor at Large of The Wall Street Journal. His weekly column for the editorial page, “Free Expression,” appears in The Wall Street Journal each Tuesday. Mr. Baker is also host of “WSJ at Large with Gerry Baker,” a weekly news and current affairs interview show on the Fox Business Network, and the weekly WSJ Opinion podcast "Free Expression" where he speaks with some of the world's leading writers, influencers and thinkers about a variety of subjects.

Mr. Baker previously served as Editor in Chief of The Wall Street Journal and Dow Jones from 2013-2018. Prior to that, Mr. Baker was Deputy Editor in Chief of The Wall Street Journal from 2009-2013. He has been a journalist for more than 30 years, writing and broadcasting for some of the world’s most famous news organizations, including his tenure at The Financial Times, The Times of London, and The BBC.

He was educated at Corpus Christi College, Oxford University, where he graduated in 1983 with a 1st Class Honors Degree in Philosophy, Politics and Economics.